Handbook of Exchange Rates

23.5 Acknowledgments

The authors thank Jessica James (the editor) and anonymous referee for useful suggestions and comments. All the remaining errors are solely our responsibility. The views expressed in this chapter are those of the authors and do not necessarily reflect those of Goldman Sachs or the Bank for International Settlements.

¹According to the 2010 BIS Triennial survey, average daily turnover in exchange-traded currency products for all currencies was $166 billion compared with $3981 billion in OTC instruments including spot, outright forwards, and swaps.

²A CTA is a firm registered with the CFTC. It receives compensation for giving investors advice on options, futures, and the actual trading of managed futures accounts.

³These carry trade positions were typically built by combining two different pair against the US dollar such as the net short yen position and the net long euro position, although the CME currently lists cross-rate pairs not including the US dollar such as the yen–euro pair so that traders can bet on FX directions directly without using the US dollar as an intermediary.

⁴The United Kingdom dismantled controls on capital outflows in 1979. Japan also removed the capital controls in 1979. France and Italy abolished their capital controls in 1986, followed by Spain and Portugal to meet a 1990 deadline for liberalization set by the European Community.

⁵See Brunnermeier (2009) and Taylor and Williams (2009) for details on the subprime loan problem and its ...